The agency rating Fitch considers that the Catalan economic agreement agreed by the PSC and the ERC will improve the credit situation of Cataloniawhile stressing that it is “unlikely” that this will have an “immediate impact” on the rating of the community governed by Salvador Illa. Moreover, all this will be at the expense of cut off resources from the rest of the regions of the country.
“With the proposed financing system, Catalonia’s financial autonomy would be much greater than that of the Spanish regions under the common regimeand closer to that of the Autonomous Communities of the Basque Country and Navarre,” the American firm explained in a note this Monday.
But Fitch does not expect the regional financing reform agreed between the Socialists and Republicans to materialize in the short term. This is the case, the rating agency explains, because “Majority required in Congress of Deputies to amend regional financing lawswhat is missing from the parties supporting this reform.
More deeply, the signature of rating stresses that the Catalan concert will reduce the region’s net contribution to the “equalization funds” with other regions. That is to say, will cease to contribute to territorial cohesion.
“At present, The region contributes more than it receives because it is richer than average. national. But according to the agreement, Catalonia’s solidarity contribution cannot exceed what it receives,” reads the Fitch note. In this context, the analysts conclude, even if the reform “would be positive for Catalonia’s finances, but negative for the regions that currently benefit from the equalization funds.
Furthermore, regarding the rating of the Mediterranean region, the agency believes that it would only improve if its debt parameters did the same, which it considers “unlikely in the short term”. “In our view, The reform would not reduce the likelihood of central government supportsince Catalonia would continue to have access to the State’s liquidity support mechanisms,” analysts say.
